Constraints of venture capital in us, Finance Basics

Constraints of Venture Capital in US

1. Require of rich investors in US, thus inadequate equity capital.

2. Inefficiencies of stock market - NSE is investors and inefficient cannot sell the shares in future. Prices do not reflect all the obtainable information in the market.

3. Infrastructural problems - this limits the increase rate of small firms that require raw unlimited access and materials to the market factors of production.

4. Require of managerial skills on part of owners and venture capitalists of the firm.

5. Nature of small business in US.  There are three (3) kinds.

a. Large MNC - these are established firms such could raise funds simply.

b. Asian owned small businesses - They are family owned thus do not need interference of venture capitalists since they are not prepared to share profits.

c. African - owned business - require venture capital but have little potential for growth.

6. Concentrate on low risk ventures as like an example confining to low growth sectors, low technology along with minimum investment risks.

7. Conservative approach via the venture capitalists.

8. Delay in project evaluation as like example months or more thus entrepreneurs lose interest in the project.

9. Lack of inefficient financial system and government support.

Posted Date: 1/30/2013 12:23:08 AM | Location : United States

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